Japanese insurance group Sompo Holdings has reportedly acquired a 10 percent stake in Bitpesa, a Kenyan digital currency exchange and payments company, for 570 million yen ($5.02 million). The deal is expected to further digitize the insurer’s international remittance service.

Crypto-Backed Remittances

Sompo Holdings said in an online statement that it intends to use the digital currency-backed fiat remittance business of Nairobi-based BTC Africa, which trades as Bitpesa, to lower the cost and time it takes for global currency transfers.

“Using Bitpesa’s technology, developed through various experiments in remittances and settlements, we will extend our presence in the international remittance service market and consider the application of this technology to the insurance field,” Sompo Holdings said.

The Tokyo-listed insurer, which reported sales of 192.78 billion yen ($1.7 billion) for October, did not disclose the terms of the deal. However, Japanese-language media outlets have valued the transaction at roughly 570 million yen, without citing sources.

“We believe that the two companies will be able to solve the problem of expensive commissions and remittance times for international remittance by using the virtual currency … digitizing international remittance services,” Sompo Holdings explained, describing the arrangement as a “win-win” for both companies.

The Japanese insurer also claimed that the tie-up will raise Bitpesa’s global profile by having it as a shareholder. It said that it will help the Kenyan company to expand its customer base.

Bitpesa Sees Rapid Growth

When Bitpesa was founded by American political science graduate Elizabeth Rossiello in 2013, the company initially focused on facilitating bitcoin-supported cash transfers between citizens of the U.K. and Kenya. However, Bitpesa now has operations in eight African countries: the Democratic Republic of the Congo, Ghana, Kenya, Morocco, Nigeria, Senegal, Tanzania and Uganda. It helps people to trade digital assets while making payments for goods and services at home and abroad.

The company boasts a range of clients, from African businesses to multinational companies that need to pay suppliers in countries such as the United Arab Emirates and China. It also caters to global remittance companies using API services for payments to mobile money operators, as well as bank networks in the African countries in which it has a presence.

In September, Bitpesa signed a deal with another Japanese company, SBI Remit, to allow people throughout Africa to make payments for cars, which is a multimillion-dollar industry on the continent. The two companies also aim to facilitate faster overseas payments for beauty products and electronic gadgets at lower costs than similar services.

Africans making overseas purchases can now deposit their local fiat currencies into Bitpesa’s bank account, after which the payments are sent on the Bitcoin blockchain to SBI Remit, which in turn makes the final payments in Japan. The entire process can be completed within a matter of hours, at about half of the usual transfer cost. They claim that conventional banking methods on the continent take about two weeks to handle similar transactions, with transfer fees of around 7 percent of the total purchase amount.

Elizabeth Rossiello

Although Rossiello has not commented on the latest deal with Sompo Holdings, she has spoken out about the SBI Remit partnership. “If it makes sense for us to settle using cryptocurrency or fiat currencies, then we do,” she said. “And in this case, we’re happy that SBI feels the same way, so we’re open to using digital or fiat currencies to settle between us.”

What do you think about the partnership between Bitpesa and Sompo Holdings? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Jeffrey Gogo is an award winning financial journalist based in Harare, Zimbabwe. A former deputy business editor with the Zimbabwe Herald, the country's biggest daily, Gogo has more than 15 years of wide-ranging experience covering Zimbabwe's financial markets, economy and company news. He first encountered bitcoin in 2014, and began covering cryptocurrency markets in 2017

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